KVB Market Analysis | 5 August: Gold Declines in Early Asian Session Amid Profit-Taking and Market Uncertainty

Product: XAU/USD

Prediction: Increase

Fundamental Analysis: 

Gold fell in the early Asian session in possible profit-taking after gold futures reached a fresh record intraday high on Friday. The US NFP report is expected to show that 175K new workers were hired in July, a decrease from the previous addition of 206K. The actual figures fell short to 117k. Signalling an increase for XAUUSD. Annually, the wage growth measure is estimated to have decelerated to 3.7% from the prior reading of 3.9%, with the monthly figure growing steadily by 0.3%. Softer-than-expected wage growth data will diminish fears of persistent inflation, which will strengthen Fed rate-cut prospects. On the contrary, stubborn numbers would weaken them. Meanwhile, deepening risks of an all-out war between Iran and Israel have improved the Golds safe-haven appeal. Iran vows to retaliate against the killing of Hamas leader Ismail Haniyeh by an Israeli air strike in Tehran.

Technical Analysis: 

Gold price trades in a channel pattern on a daily time frame, which is slightly rising but broadly exhibited a sideways performance for more than three months. The 50-day Exponential Moving Average (EMA) near $2,370 continues to provide support to the Gold price bulls. The 14-day Relative Strength Index (RSI) moves higher to near 60.00. If the RSI climbs above that level, the momentum will shift to the upside. A fresh upside would appear if the Gold price breaks above its all-time high of $2,483.75, which will send it into uncharted territory. On the downside, the upward-sloping trendline at $2,225, plotted from the October 6 low near $1,810.50, will be a major support in the longer term.  

Product: EUR/USD

Prediction: Increase

Fundamental Analysis: 

EUR/USD failed to build on Wednesday recovery gains and dropped to a fresh multi-week low of 1.0777 on Thursday. Early Friday, the pair holds slightly above 1.0800 as investors await the July jobs report from the US. The US Dollar (USD) gathered strength against its rivals on Thursday as safe-haven flows dominated the financial markets, causing EUR/USD to push lower. In the European morning on Friday, US stock index futures are down between 0.7% and 1.8%, pointing to a risk-averse market atmosphere. Nonfarm Payrolls (NFP) in the US are forecast to rise 175,000 in July, following the 216,000 increase recorded in June. In case the NFP disappoints, with a reading below 150,000, the immediate market reaction could cause the USD to come under renewed bearish pressure and allow EUR/USD to stretch higher. Nevertheless, the pair's upside could remain capped unless there is a noticeable improvement in risk mood. On the other hand, a positive surprise could provide an additional boost heading into the weekend and drag EUR/USD to fresh multi-week lows.

Technical Analysis: 

EUR/USD faces a strong resistance area at 1.0810-1.0820, where the descending trend line meets the 200-day Simple Moving Average (SMA). In case the pair manages to stabilise above this level and starts using it as support, 1.0850 (20-day SMA) could be seen as the next resistance before 1.0880 (Fibonacci 23.6% retracement level of the latest uptrend). On the downside, 1.0780 (Fibonacci 61.8% retracement) aligns as first support before 1.0740 (Fibonacci 78.6% retracement) and 1.0700 (psychological level, static level)

Product: USD/JPY

Prediction: Decrease

Fundamental Analysis: 

USD/JPY has come down significantly from its high of 161.96 on July 3. A combination of Japanese FX intervention and major shifts in U.S. Federal Reserve expectations played a large role. With the market still seeing short yen, further moves down in USD/JPY would not surprise and some players are eyeing possible tests of 140.00 or lower.

The two bouts of Japanese intervention were timed almost perfectly. The first at end-April/early May was to stem further yen weakness after USD/JPY traded through a high dating back to 1990. The next round on July 11-12 followed a weak U.S. CPI report. The combination and subsequent weak U.S. data has seen USD/JPY as low as 144.76 Monday.

Technical Analysis: 

The yen, which hovered around 157 to the dollar at the time of the June meeting, hit a 38-year low below 161 in July - a move that likely affected the BOJ's decision to hike short-term rates to 0.25% from 0-0.1% at the July 30-31 meeting. The price of USDJPY has been falling sharply ever since the 161 price point and it has since fallen to the 1.618 of the Fibonacci level of 145.45. If the price continues to fall further. It will reach 1 which would be the equivalent of 139.5.

Product: BTC/USD

Prediction: Decrease

Fundamental Analysis: 

Bitcoin plunged to its lowest level since February, while ether traded down below $2,400 on Sunday night EST amid a broad crypto market selloff, as investors reacted to various news events, including macroeconomic updates, Jump Crypto‘s asset movements and the increasing odds of Kamala Harris winning the upcoming U.S. election against pro-crypto Donald Trump. Bitcoin dropped below $54,000 at one stage tonight before making a modest recovery to trade at $54,698, its lowest level since February, according to The Block’s crypto price page. Ether also fell to its lowest level since February, losing 19.45% to trade at $2,333 at the time of writing.

Technical Analysis: 

A broad weekend selloff in crypto accelerated during Sunday evening U.S. hours, sending bitcoin  plunging to levels not seen since February and ether {{ETH}} back to prices not seen since December. Bitcoin is lower by 12% over the past 24 hours and 20% on a week-over-week basis. Now down 21% over the past 24 hours and 30% over the past week, ether {{ETH}} has given up the entirety of its year-to-date gain, and is off by roughly 3% since Jan. 1. The broader CoinDesk 20 Index is down 12% over the past 24 hours. The trigger for what's now become a massive correction in crypto and traditional markets just might have been the Bank of Japan, which last week hiked its benchmark interest rate.

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